12/21/23 – Fannie/ Freddie Changes Part 1 – Departing Residence Rental Income

Four days until Santa slides down that Chimney and gets us everything we want. That may have been the thought for me some 50+ years ago, and today, I hope to get through the holidays with no meltdowns from friends or family! LOL!

Fannie and Freddie changed a few things in their guidelines, and today, I will write about the rental income on a departing residence rule that was modified yesterday. The old rule was we did not need a check or a lease agreement from the new renter on the departing residence, and now we will need a check and a lease agreement on the departing residence. We can do a month-to-month lease; the first lease payment must be on or before the first mortgage payment. We will also need evidence that the owner of the property has received the deposit and first lease payment. We often get clients who buy a property and don’t rent it for six months or a year, and then we get to do a loan, and they are now renting a property that does not show on taxes. We can now use some income if we have evidence that the owner is receiving such income.

The guideline of needing one comparable sale with an ADU to use ADU income to help qualify is no longer. You no longer need a comparable sale that is receiving rental income to use the ADU income.

Condo / Townhome issues we know of now. Properties can be financed with 10% down and are considered NON-WARRANTABLE:

1. American Beauty Village – West has insurance issues – East will get renewed February 28, 2024, and will likely be deemed non-warrantable at that time.
2. Scenic Hills – Insurance
3. Mariposa – Litigation semi-cleared! Insurance a mess!
4. Bouquet Canyon Village – Insurance
5. Madison – Litigation – I heard an FHA loan closed in there! I am trying to find out if it is an underwriter error, or will it be okay to do FHA loans there?
6. West Creek / West Hills – Insurance
7. Cornerstone – Insurance
8. Canyon Oaks – Insurance
9. Brookside Walk – Insurance – NEW as of last week
10. Shadow Ridge – Oak Park – Insurance
11. Cabrini Villas – Burbank – Insurance
12. Sierra Glen Condos – Insurance
13. American Beauty Condos – The brown ones – Insurance – 50 Mil in coverage for 748 units is not nearly enough!

Las Ventanas – Litigation cleared – NO LONGER ON THE NAUGHTY LIST!!! REPAIRS HAVE BEEN MADE!!!  

Please let me know if you hear anything new on condos or townhouses.

Interest rates are up slightly today, but volume is low, and rates are still at their lowest levels in months.

• 12-day escrows if your buyer is pre-approved - Conventional / FHA / Jumbo / Bridge
• We do loans in all states, so call me with anything you need.  
• Government Loans (FHA / VA) are in the high 5’s and low 6’s
• Conventional Loans up to $765,550.00 are in the low to mid 6’s
• High Balance Loans $765,550.00-$ 1,148,325.00 are in the mid to high 6’s
• Jumbo loans above $1,148,325 are in 6’s
• Bank statement loans - They are available with 10% down again! 8’s and 9’s depending on down and credit score.
• No income qualifier – 40% down with reserves! In the 8’s!
• 0 down loans are in the high 7’s – 660 credit score min right now, up to $740,000.00.
• Private Money lenders - hard Money Loans – 35% down!
• No Ratio Loans 30% down
• Debt Service Coverage loans with as little as 25% down
• Bridge Loans - typically 7.500% with limited fees – and they get you where you need to go!
• 0 down California Dream for all Equity Share – Postponed until February 2024???
• 3/2/1 Buydowns 2/1 Buydowns and 1/0 Buydowns are available at great start rates!

Interest rates are subject to change without notice! Above are LA County Loan Limits.

I am available all weekend if you have any questions or if someone is interested in buying a property! My cell is 661-714-6258, and my office line is 661-260-2970 ext. 2222. Please text (661-714-6258) or email me at Mike@AugustaFinancial.com.

Have a Merry Christmas and a happy holiday season.